Sneak Peek: New Report to the Nations Takes Fraud’s Temperature Worldwide

New Report out May 20 at ACFE.com/RTTN.

GUEST BLOGGER

Scott Patterson, CFE
ACFE Senior Media Specialist

Small businesses (those with fewer than 100 employees) still bear the brunt of fraud’s damaging effects. They are more often the victims of fraud cases than larger organizations, and their financial losses are disproportionately high. Another fraud fact: two out of three perpetrators are men, a persisting gender gap that shows no sign of closing.

These and other insights are detailed in the ACFE’s newly published 2014 Report to the Nations on Occupational Fraud and Abuse. The Report is based on data compiled from a study of 1,483 cases of occupational fraud that occurred worldwide between January 2012 and December 2013. All information was provided by the Certified Fraud Examiners (CFEs) who investigated those cases. The fraud cases in our study came from nearly 100 nations, providing a truly global view into the plague of occupational fraud.

A few of the other findings in the 80-page Report:

• Fraud schemes are extremely costly. The median loss caused by the occupational fraud cases in the study was $145,000. More than one-fifth of these cases caused losses of at least $1 million.
• Schemes can continue for months or even years before they are detected. The frauds in the study lasted a median of 18 months before being caught.
• Tips are key in detecting fraud. Occupational fraud is more likely to be detected by a tip than by any other method. The majority of tips reporting fraud come from employees of the victim organization.
•  Occupational fraud is a global problem. Though some findings differ slightly from region to region, most of the trends in fraud schemes, perpetrator characteristics and anti-fraud controls are similar regardless of where the fraud occurred.

Since the inception of the Report in 1996 (originally titled The Wells Report), the ACFE has released seven updated editions — in 2002, 2004, 2006, 2008, 2010, 2012, and the current version in 2014. Like the first Report, each subsequent edition has been based on detailed case information provided by Certified Fraud Examiners (CFEs).

With each new edition of the Report, the ACFE adds to and modifies survey questions in order to enhance the quality of the data. This evolution of the Report to the Nations provides a more meaningful statistical picture drawn from the experiences of CFEs and the frauds they encounter.

Download the Report at ACFE.com/RTTN on May 20.

4 Steps to Win Over Law Enforcement

SPECIAL TO THE WEB

Edward R. Smith, CFE
Contributing writer, Fraud Magazine

Fraud examinations involve careful gathering and analysis of data and details. If this isn't difficult enough, we also face another daunting obstacle: turning the case over to law enforcement.

Turning your case over to law enforcement can be a difficult undertaking especially if you work in private industry and haven't served previously in a law enforcement capacity. There's nothing more frustrating than seeing law enforcement reject your case.

So why would this happen?  

• Is it because your case wasn't thoroughly prepared?
• Is it because law enforcement doesn't understand what makes up a fraud case?
• Is it because law enforcement doesn't have the manpower and/or budget to devote to fraud cases?
• Is it because law enforcement is too busy with violent crimes?
• Is it because the case doesn't meet the minimum thresholds for prosecution?
• Is it because you don't know how the criminal justice system operates?
• Is it because you aren't comfortable dealing with law enforcement?
• Is it because you think that you're better than law enforcement officials?

The answers to any of these questions could be yes.

The following items are vital for a successful outcome: a good working relationship with law enforcement, a general knowledge of criminal law and a thoroughly prepared case — written and presented so that law enforcement personnel, grand jurors and trial jurors can understand it.

Step 1 - Understanding
Before you work with law enforcement, you must remember they have the same needs and desires in life as you do. They're proud professionals doing a sometimes thankless job. They have spouses and children. Not all of them eat donuts. They don't just concentrate on violent criminals. They're well educated and willing to learn new things. Day in and day out they deal with people who are at their worst.

Step 2 - Rapport
Establish a good relationship with law enforcement. Call and introduce yourself to the person in charge of the investigations bureau. Arrange a meeting and discuss your company and the types of problems you face. If possible, invite him or her to your place of business and show them around.

Step 3 – Preparing a thorough case
It takes more than establishing a good working relationship with law enforcement to get your case accepted. I can't overemphasize the importance of doing a complete and thorough investigation. Without one, your case doesn't stand a chance.

Step 4 – Effectively working together 
Here are a few things you can remember so you don't alienate yourself from law enforcement:  

• Empathize but resist the urge to put yourself in their shoes (unless you've had law enforcement experience). 
• Present your thoroughly prepared case to them in person if possible; the personal touch is always appreciated. 
• Be patient and explain the case in terms that anyone can understand and guide them in the right direction if they start to stray. 
• Finally, always be available to answer their questions.

Read the full article with more details on Fraud-Magazine.com.